Embraer (ERJ) Chair Mauricio Botelho told investors the company would launch two new products in the third quarter 2007 which would expand its current business aircraft offerings. Interestingly, the company already has the very light jet (VLJ) market covered with the Phenom 100/300 and has addressed the corporate aviation market with the Legacy based on the ERJ 135 platform as well as the very large corporate aircraft market with its Lineage. The company indicated the two new products would fill the gap between the Phenoms and the Legacy 600.

Embraer (ERJ) reported third quarter net sales of $894.1 million, down 16 percent and net income of $61.4 million, down 45. 5 percent. The firm order backlog as of September 30 is $13.3 million, up 30.4 percent over the second quarter. The company attributed the earnings to intense sales efforts in all business areas which resulted in 137 new firm orders in commercial aviation and more than 300 in firm orders for the Phenom family. Its firm order backlog for the ERJ 170/190 family stands at 543 with 421 options and does not include the order for 36 ERJ 175s recently placed by Northwest (NWACQ). It maintains its revision of its 2006 delivery forecast at 10 fewer aircraft at 135 this year, resulting from taking back wing assembly for the 190 from Mitsubishi Heavy Industries. In 2007, it will make up the 10 aircraft by producing 160 aircraft rather than 150 originally forecast.

A total of 30 aircraft were delivered during the third quarter of 2006, contributing to net revenues of US$894.1 million, compared to 41 deliveries and net revenues of US$1,064.3 million in the same period last year. Despite the 7.2 percent average appreciation in the BRL/USD year over year and the difficulties with the ERJ 190 and 195 aircraft, the gross margin remained at 28.3 percent in the third quarter of 2006, compared to 28.1 percent in the same period last year and to 28.2 percent in the second quarter 2006 income from operations reached US$46.4 million in the third quarter of 2006, down from the same period last year. This decrease is due to the lower number of deliveries in the quarter, higher operating expenses and an increase in R&D expenses. The decrease in operating results led to lower levels of net income and net margin, which totaled US$61.4 million and 6.9 percent in the third quarter compared to US$110.2 million and 10.4 percent in the year-ago quarter, respectively. During the third quarter of 2006, the company maintained its high level of liquidity and at September 30, its net cash position totaled US$507.3 million.

In other news, Virgin Blue Airlines ordered 14 Embraer EJets to support its expansion in the domestic and regional markets throughout the South Pacific. The deal includes three ERJ 170s and 11 ERJ 190 jets, plus options for six aircraft. Based in Brisbane, Virgin Blue is a low-fare airline. It launched in 2000 with two aircraft, growing to capture 30 percent of the domestic market. The airline and its sister carriers, Pacific Blue and Polynesian Blue, currently operate a fleet of 53 aircraft and fly to 23 domestic destinations, including every state and territory capital across the nation, and eight international destinations taking in New Zealand, Vanuatu, the Cook Islands, Fiji, Tonga and Samoa.

The ERJ 145 platform reached an historical 10 million flight-hours after a decade in service. The total number of cycles is around 8.5 million. The first aircraft delivered have already achieved 20,000 flight cycles. Nearly 1,000 aircraft based on the ERJ 145 platform have been delivered by Embraer to date and fly for 87 operators: 26 in North America, 10 in Latin America, 36 in Europe, three in Africa, and 12 in Asia. Based on the ERJ 135 platform, 85 Legacies have been delivered to customers in 18 countries.

 

Embraer - On September 30, 2006, a total of 30 jets had been delivered
Deliveries by Segment	*3Q06	9M06
Commercial Aviation	22	73
ERJ 145	1	10
EMBRAER 170	9	26 (2)
EMBRAER 175	3	8
EMBRAER 190	8	28
EMBRAER 195	1	1
Executive Aviation	8	17
Legacy 600	8	17
Defense and Government**	-	3
EMBRAER 170	-	2
EMBRAER 190	-	1
TOTAL	30	93

 

*Units identified in parentheses were aircraft delivered under operating leases ** Includes only deliveries of executive jets configured for transporting public authorities and aircraft delivered to state-run airlines Source: Embraer

 

Embraer's order book by product, in the Commercial Aviation segment, on September 30, 2006
Aircraft Type	Firm Orders	Options	Deliveries	Firm Order Backlog
ERJ 145 Family
ERJ 135	108	1	108	-
ERJ 140	74	-	74	-
ERJ 145	732	132	677	55
Total ERJ 145 Family	914	133	859	55
EMBRAER 170/190 Family
EMBRAER 170	152	133	120	32
EMBRAER 175	52	-	22	30
EMBRAER 190	298	248	41	257
EMBRAER 195	41	40	1	40
Total EMBRAER 170/190 Family	543	421	184	359
Total	1,457	554	1,043	414

 

Note: Backlog includes orders for the Defense segment placed by state-run airlines (Satena and TAME). Source: Embraer